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Strategy and analysis about mobile, smartphones, tablets and connected experiences

The Rise of Digital Civilizations Will Define Our Post-PC Future

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Everyone knows the biggest battles in technology are today being fought by a small number of large organizations. We intuitively know who these great powers are: Google, Apple, Facebook, Amazon, and maybe Microsoft. But we’re not so clear on what it is that makes those particular companies the key protagonists rather than other equally large digital companies — Samsung, Sony, Nokia and Yahoo! among them — who appear to be sidelined.

Calling this a battle, or “The Great Tech War of 2012″, misses the point. It’s far too negative a sentiment when these companies’ main focus is on long term strategy. They are aiming to construct a future in which their products and profits will prosper.

These great digital powers are now building Digital Civilizations, rather than a series of mere products, individual platforms or even ecosystems (around a platform). They are pursuing strategies that reach far beyond the confines of existing markets. They are causing widespread market collisions as they push industries to overlap, merge or cease to exist. They are outflanking and disrupting companies that follow less ambitious corporate strategies.

These new Digital Civilizations use identity to tie numerous disparate products, many devices, multiple platforms and product portfolios together into their long term strategy. Each Civilization has hundreds of millions of active users — often with credit cards attached — far more than even the largest telecom operators or media companies. They straddle industries rather than operating within legacy market sectors. They have an organizing ideology underlying their strategy that motivates and attracts talented employees, excites partners, and is the foundation for the marketing that entices users to become their customers.

What defines these Digital Civilizations? What makes them new and different? Many organizations, companies, industry consortiums, and companies have parts of this strategy in place within their current products. But the new Digital Civilizations have all of the following characteristics: 

  • Geography. Unlike past platforms or ecosystems Digital Civilizations are not tied to a single device or class of device. They work across fixed and mobile. They run on devices created by rival civilizations. This is where Sony has struggled: Too often, Sony’s strategies have been silo’ed around TV, mobile, PCs or consumer electronics although Sony may be set to change now. Examples: Apple has developed iTunes for Microsoft’s Windows PC. Amazon has an app store that runs on the rival Android tablets and its own Kindle Fire. Google develops multiple apps for Windows Phone and iOS as well as its own Android. Microsoft does too: it makes Office for the Mac; Bing, Messenger and Hotmail apps for almost everything.
  • Citizenship. Each civilization has a strong system for identity, usually tied back to a payment mechanism, which is used to recognize members, store preferences and media in the cloud, and deliver a quality experience on any device. Often these identities originated on a single web site, device or application but have now been extended for numerous other uses. Examples: Amazon’s ID has moved from enabling purchase of physical goods for home delivery to being the foundation for its Kindle and app stores. Apple’s iTunes ID now powers both its Mac and iOS app stores, iCloud, the Game Center mobile social network, as well as underpinning digital music sales and TV sales. Facebook’s ID is now used to further the company’s ambitions across the Internet and mobile apps by enabling Facebook’s citizens to log in to numerous web sites and mobile apps and taking their social graph and Facebook’s business model with them.
  • Ideology and culture. Companies used to have vision statements. Few employees and even fewer customers believed in them. The great Digital Civilizations instead have ideologies that are ingrained in everything. Google believes in the power of technology, of open source, and of doing no evil. Apple puts the creation of great products before all else, including profits. Facebook aspires to connect people. For Microsoft, this is the area where they struggle most under Ballmer. While Microsoft has strong identity services with Xbox Live, MSN Messenger and now Skype, it lacks a single organizing ideology that motivates everyone. It has several: profits, Windows everywhere, stop Google and Apple. Microsoft needs greater clarity.
  • Government. Every civilization has a system of government. It’s essential to provide a roadmap for partners; to arbitrate between product teams working in different portfolios; to ensure that legacy products do not suffocate the innovative disruption that large companies need to succeed long term; and to make hard calls about what is and isn’t allowed. Prior to Larry Page’s return as Google CEO early in 2011, this was Google’s weak spot: the company spread itself too thin. The rivalry between the computer-like Chrome OS and Android demonstrates the failure too. But Google’s role as the spider at the heart of the Open Handset Alliance (that nominally runs Android) has successfully ensured that Android has gained momentum among operators, device makers and app creators despite the iPhone’s head start. This is an Apple strength: under Jobs, the system has been either paternalistic or enlightened despotism, depending on your sentiment. But whatever you feel, it’s indisputably proved very successful to date.
  • Religion. Everyone thinks of Apple when I say this — given recent events I’m not going to develop the thinking on the Apple religion further for fear of alienating readers — but Google has its own religion too. Google demonstrates idolatry for Android, see the numerous Android figurines. Similarly, Amazon’s existentialism is most strongly shown by its belief in the (S3) cloud to solve everything, even the small local storage capacity on the Kindle Fire tablet.

How large are these rising Digital Civilizations? Each has hundreds of millions of citizens:

There are other companies building a Digital Civilization: Most notable are Valve’s Steam gaming system (around 35m citizens); Sony, who are extending from their PlayStation network into a complete media service; eBay with commerce; and perhaps RIM with BlackBerry.

What must other companies do? They must decide how to respond to the rise of these great digital powers, the rise of the Digital Civilizations. There are three main strategic approaches:

  • Build a rival Digital Civilization. This is a horribly expensive to thing to do. That’s what it took HP so long to realize with Palm’s Web OS and is why they are having such a hard job selling it now: Having a mobile-only operating system and mobile ecosystem is no longer sufficient to compete, it’s under scale and will be outflanked. HP has spent well over a billion dollars so far and has little concrete successes to show. RIM faces the same problem with BlackBerry: is it possible to create a sustainable future with a platform that is purely mobile? I worry. Last year the CEO of one of the largest mobile handset makers told me they couldn’t afford to create a smartphone OS, the problem is building a civilization  is an order of magnitude more costly. The new strategies have to straddle markets or risk being outflanked. This is why Microsoft is so focused on Xbox and mobile, to ensure a long term future it needs to extend its success with the Windows PC to become something much greater, to become a Digital Civilization. In the future, we will see the fight back of smaller companies that band together in industry consortia to build rival civilizations.
  • Partner closely with a Digital Civilization. This is a classic strategy. Nokia has done this with its choice to use with Microsoft’s Windows Phone as its main smartphone platform and in future Nokia will likely use Microsoft software for tablets too. Many telecom operators have close historic ties to Microsoft as well. Google and Apple have made much trickier partners. Google has been too unpredictable while Apple has been well, single minded, though under Cook this could evolve. Now is the time to talk with them and find out. By contrast, Facebook has already tied many small knots, including with Microsoft.
  • Support intra-Civilization trade. Consumers will be citizens of multiple civilizations for years to come. Companies have a clear opportunity to help consumers to avoid the pain of taking their preferences media across civilizations. Historically, the clearest examples of this have been accessory makers that create and sell physical adaptors. There’s a need for the same role for software and digital content too. Due to their relationships with multiple vendors, and a mass market customer base, telecom operators have a particularly strong foundation for succeeding with this strategy.

Whatever companies decide to do. The most important takeaway from the digital struggles of 2011 is that we are seeing the results of long term strategy by a small number of highly disruptive digital companies.

The fighting is a distracting diversion. Instead, companies must understand the implications from the creation of these new Digital Civilizations and develop their own long term corporate strategy to navigate around the new digital great power landscape.

Companies now must  have an integrated strategy to drive how their products respond to the rise of the Digital Civilizations. Otherwise they risk being outflanked as old market boundaries collapse or failure because they fight the wrong battles.

6 Responses

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  1. This is the most incoherent blog post I’ve read so far today.

    “Everyone knows the biggest battles in technology are today being fought by a small number of large organizations. We intuitively know who these great powers are: Google, Apple, Facebook, Amazon, and maybe Microsoft.”

    Why “maybe” Microsoft? From first two sentences, this article is ambiguous. If you make an assertion like this, it warrants an explanation — but there no explanation is available because this classic anti-Microsoft rhetoric has no basis whatsoever in the real world.

    “The Rise of Digital Civilizations Will Define Our Post-PC Future”

    I understand and like the term “digital civilisations” but the headline makes no sense. I’m trying to resist the temptation to use a word as strong as “nonsense”.

    Inserting the official Apple corporate propaganda term “post-PC” in the headline is meaningless. This alternative headline is equally valid:-

    “The Rise of Digital Civilizations Will Define Our PC Future”

    Tim Acheson

    November 25, 2011 at 1:57 pm

    • As you can see from my the rest of the article, I include Microsoft as one of the big five. I explain how large its civilization is compared to the others and refer to Microsoft products in examples throughout the piece.

      However, many people no longer see Microsoft as relevant and don’t discuss it in the same breath as the others. Just look at the subtitle on that Fast Company piece on “The Great Tech War of 2012,” where it says, “Apple, Facebook, Google, and Amazon battle for the future of the innovation economy.” Note, they don’t include Microsoft in there. The reason I put “maybe Microsoft” in the introduction was to allude to that kind of thinking.

      Microsoft does however have some serious challenges. The main one is around ideology. Compared to the others listed here Microsoft has a weak and divided ideology. The cancellation of the Courier project and the decision to use the full version of Windows on tablets shows that the Microsoft folks doing the best innovation are losing out on the political battles in favour of Microsoft’s existing products. I’ve tested the Windows 8 alpha and it has a really really confusing user interface. Windows Phone 7 on the other hand has an outstanding UX: It’s differentiated from other smartphones, it’s fast, and consistent.

      Kinnect and Windows Phone are really excellent products but Microsoft risks not maximizing their promise because it’s the Windows PC folks that appear to be driving corporate strategy rather than the Xbox and Windows Phone teams. J Allard’s departure highlights the internal tensions. See this piece: http://news.cnet.com/8301-10805_3-20128013-75/the-inside-story-of-how-microsoft-killed-its-courier-tablet/

      As for the title. Well, of course that title would work with just using the word “PC” rather than “Post PC”. They are two sides of the same coin, so to speak. I disagree “Post PC” is solely an Apple term. Jobs was far from the first to use it and neither will he be the last. I think however that it’s unarguable that the era we are moving into is no longer dominated by the PC. Smartphones are becoming ubiquitous. Tablets are finally taking off. Even interactive TV — now variously called smart TV or connected TV — is showing a few signs of (faltering) traction after numerous false starts… This is a new era and the PC is no longer the sole device. That’s also why these Civilizations are so interesting: They don’t trade one device’s dominance for another new device. Instead they aim to work everywhere on whatever devices and use a strong identity/citizenship system in order to do it.

      Ian Fogg

      November 25, 2011 at 5:55 pm

  2. “The Rise of Digital Civilizations Will Define Our Post-PC Future”

    Can you clarify what any of this has to do with “post-PC”? I regard “post-PC” as an official Apple corporate propaganda term, popularised by Steve Jobs himself, and using it in a headline attracts interest from proponents of this philosophy (e.g. @charlesarthur) but I suspect you had good reasons for using that term and would like to understand your rationale.

    “Everyone knows the biggest battles in technology are today being fought by a small number of large organizations. We intuitively know who these great powers are: Google, Apple, Facebook, Amazon, and maybe Microsoft.”

    Why “maybe” Microsoft?

    Tim Acheson

    November 25, 2011 at 2:17 pm

  3. Hello Ian,

    Great overview! I already forwarded it to a few colleagues internally.

    So it seems a bit easier to identify today’s winners and “not so winners” in the consumer technology than it is in the service provider space. I would like to know how you see the telco role in this battle. Do you think of the ATTs, Verizons and Telefónicas as (at best) mere partners of one or more of the big5 you mention? Or do you see ways in which telcos can compete head to head, or at least, stay up to par with the best technology companies ? Do they stand a chance in the digital civilization era (at least within the converging customer’s home, if nowhere else)?

    I hope to read more from you soon!

    Best,

    Hector

    December 1, 2011 at 10:30 am


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